by Russell Mokhiber and Robert Weissman

Dissident Voice
January 4, 2003

2002 will forever
be remembered as the year of corporate crime, the year even President George
Bush embraced the notion of "corporate responsibility."

While the Bush
White House has now downgraded its "corporate responsibility portal"
into a mere link to uninspiring content on the White House webpage, and
although the prospect of war has largely bumped the issue off the front pages,
the cascade of corporate financial and accounting scandals continues.

Consider this
partial list of developments in the United States just in the month following
the November 5 elections:

* A shakeup in
Tenet Healthcare management followed revelations that Medicare is investigating
the company for improper billing;

* Harvey Pitt
resigned as chair for the SEC;

* Unsealed court
documents show Mastercard and Visa collaborated to discourage use of rival
debit cards;

* Five Wall
Street firms, including Goldman and Citigroup, were hit with $8.3 million in
fines for failing to save e-mails desired by state and federal regulatory
authorities;

* The Grubman
e-mails became public, indicating a leading Citigroup analyst altered his
assessment of AT&T at the behest of Citi’s CEO, and in exchange for efforts
to get the analyst’s kids into an elite nursery school;

* The SEC
commenced an investigation of Tenet, concerned about high levels of stock
trading in advance of announcements that affected share price;

* Media accounts
reported an expected $1 billion in fines to be levied against Wall Street firms
for purposefully presenting overoptimistic analysis of stocks to the public,
with Citigroup reported to be hit with a $500 million fine;

* The Sunday
Times of the United Kingdom reported that Goldman Sachs internal e-mails show
analysts were privately concerned about the future of telecom firms, but did
not lower their public ratings of the firms;

* The SEC took
action against Raytheon, Secure Computing and Siebal Systems for providing
"market moving" information to analysts and investors, without
conveying the same information to the public;

* William
Webster indicated he will resign as chair of the newly formed accounting board
before its first meeting in January;

* El Paso
Corporation pled its case before the Federal Energy Regulatory Commission,
arguing it did not withhold energy from California -- helping precipitate the
California energy crisis ó as an administrative judge earlier found; and

* Mattel agreed
to a $122 million settlement of a shareholder suit related to false statements
the company allegedly made during its purchase of the Learning Company.

We easily could
have filled our 10 worst list with some of the dozens of companies embroiled in
the financial scandals.

But we decided
against that course.

As extraordinary
as the financial misconduct has been, we didn’t want to contribute to the
perception that corporate wrongdoing in 2002 was limited to the financial
misdeeds arena.

We asked Lee
Drutman and Charlie Cray from Citizen Works to review the 2002 accounting and
financial malefactions in a separate article, which appears after this one.

For our 10 Worst
Corporations of 2002 list, we included only Andersen from the ranks of the
financial criminals and miscreants. Andersen’s assembly line document
destruction certainly merits a place on the list. (Citigroup appears on the
list as well, but primarily for a subsidiary’s involvement in predatory lending,
as well as the company’s funding of environmentally destructive projects around
the world.)

As for the rest,
we present a collection of polluters, dangerous pill peddlers, modern-day
mercenaries, enablers of human rights abuses, merchants of death, and
beneficiaries of rural destruction and misery.

The overarching
picture that emerges from these profiles: Not only are Enron, WorldCom,
Adelphia, Tyco and the rest indicative of a fundamentally corrupt financial
system, they are representative of a rotten system of corporate dominance.

ARTHUR ANDERSEN

Teaching A Lesson

It may just be
that the criminal prosecution of Arthur Andersen will be the last such
prosecution of a large institution caught up in this year’s corporate fraud
scandals.

The criminal
prosecution and conviction of Andersen (the company was fined $500,000) on
obstruction of justice charges was an effective death sentence for the giant
accounting firm.

The lesson it
taught to federal prosecutors: don’t indict a big accounting or financial firm
unless you want to kill it off and throw out of work thousands of employees.

In an indictment
filed earlier this year, federal officials alleged that on October 23, 2001,
Andersen partners assigned to the Enron audit launched "a wholesale destruction
of documents" at Andersen’s offices in Houston, Texas.

"Andersen
personnel were called to urgent and mandatory meetings," the indictment
alleged. "Instead of being advised to preserve documentation so as to
assist Enron and the SEC, Andersen employees on the Enron management team were
instructed by Andersen partners and others to destroy immediately documentation
relating to Enron, and told to work overtime if necessary to accomplish the
destruction."

During the next
few weeks "an unparalleled initiative was undertaken to shred physical
documentation and delete computer files," according to the indictment.

"Tons of
paper relating to the Enron audit were promptly shredded as part of the
orchestrated document destruction," the indictment alleges. "The
shredder at the Andersen office at the Enron building was used virtually
constantly and, to handle the overload, dozens of large trunks filled with
Enron documents were sent to Andersen’s main Houston office to be shredded. A
systematic effort was also undertaken and carried out to purge the computer hard-drives
and e-mail system of Enron-related files."

And the feds
alleged the shredding wasn’t isolated to Houston, as Andersen claimed.

Federal
officials said that instructions were given to Andersen personnel working on
Enron audit matters in Portland, Oregon, Chicago and London.

The shredding
did not stop until November 8, 2001, when the SEC served Andersen with the
anticipated subpoena relating to its work for Enron.

Only in response
to the subpoena did Andersen send out a "no more shredding" message,
because the firm had been "officially served" for documents.

Federal law
makes it a crime for anyone to "corruptly persuade" another person to
destroy documents "with intent to impair" the use of the documents
"in an official proceeding."

Many white
collar defense lawyers interpret this to mean that document destruction may
occur right up until, or right before, a subpoena arrives.

For example, in
a 1994 article in the Cardozo Law Review titled "When Bad Things Happen to
Good Companies: A Crisis Management Primer," Harvey Pitt, the outgoing
chair of the Securities and Exchange Commission, wrote:

"Ask
executives and employees to imagine all their documents in the hands of a
zealous regulator or on the front page of the New York Times. Each company
should have a system for determining the retention and destruction of
documents. Obviously, once a subpoena has been issued, or is about to be
issued, any existing document destruction policies should be brought to an
immediate halt."

At a press
conference earlier this year, Pitt was asked about this advice.

"Whatever
advice anyone gives as a private lawyer -- and I stand by the advice I gave, I
might add -- when you are representing the public interest, you have to put on
your public interest hat and make absolutely certain that the public’s interest
is protected," Pitt said.

At the Justice
Department press conference announcing the indictment against Andersen, Deputy
Attorney General Larry Thompson was asked about Pitt’s advice.

"I know Mr.
Pitt," Thompson said. "He’s a fine lawyer. And I haven’t read the
article that you’re talking about, but I would direct your attention to 18 USC 1512(e),
which makes it clear that an official proceeding does not have to be pending in
order for someone to come within the ambit of the obstruction of justice
statute."

Richard Favretto
is a partner at Mayer, Brown, Rowe & Maw and one of Andersen’s criminal
defense lawyers.

Favretto hand
delivered a six-page letter to Michael Chertoff, the head of the criminal
division, on March 13, 2002, the day before the indictment was announced.

In it, Favretto
argues that there is no support for the allegation that the firm believed that
"any destroyed documents would be used in an ‘official proceeding.’"

"During the
last week, counsel for the firm repeatedly have asked Justice Department
prosecutors to identify the partners or other Andersen personnel who acted ‘corruptly’
and had the requisite criminal intent to withhold documents from an ‘official
proceeding,’" Favretto wrote. "The Department’s lawyers repeatedly
have declined to provide a meaningful response to this critical question."

But this was a
grave miscalculation on Andersen’s part.

"Under that
provision of the obstruction statute, if a person acts -- knowingly -- to
encourage or cause a person to destroy potential evidence, it doesn’t matter
that the official proceeding has not yet been initiated," says Susan
Koniak, a professor of law at Boston University Law School. "What matters
is that the encouragement to destroy was given with the intent to keep the
material from an official proceeding."

"If the
person giving the instruction or encouragement to destroy could see that an
official proceeding was coming and encourages in advance, he comes under the
terms of the statute and may be prosecuted for his conduct," she says.

Andersen was
convicted in June in a controversial decision by a jury. The conviction
effectively put out of business the accounting firm and threw out of work most
of its 26,000 person workforce.

BRITISH AMERICAN
TOBACCO

"Corporate
Mendacity"

"Some say
that ‘tobacco and responsibility’ just don’t go together -- that a business can’t
be responsible if its products can harm people."

So writes Martin
Broughton, chair of British American Tobacco (BAT), the second largest tobacco
multinational in the world, just behind Philip Morris.

Rejecting that
view, Broughton writes in BATís Social Report 2001/2002 that, "We have
much to offer in helping address the problems that concern our stakeholders,
including supporting soundly-based tobacco regulation and reducing the impact
of tobacco consumption on public health."

Broughton raises
an interesting philosophical question about how a tobacco company could be
"responsible." Unfortunately, as far as BAT is concerned, the
question is only theoretical. The company continues to engage in a series of
egregious practices, made all the worse because they involve the pushing of an
addictive and deadly product.

BAT’s social
report itself represented a major public relations ploy by the company, which
along with the rest of Big Tobacco is eager to distance itself from what the
companies acknowledge to be the bad old days -- when they denied any harms to
their product and recklessly promoted them.

As they have
throughout history, the companies, with BAT and Philip Morris at the helm, are
positioning themselves to accept minimal marketing and product restrictions while
their cutting-edge activities remain unhampered.

In advance of
the release of the Social Report, Action on Smoking and Health UK (ASH UK)
issued a counter report, "British American Tobacco -- The Other Report to
Society." Anticipating Broughton’s claim, the ASH UK report stated,
"The problem with BAT is not only that it makes a deadly and addictive
product. We judge BAT by how it behaves, its business practices, the directions
it takes and its truthfulness. We find BAT to be irresponsible because of the
way it conducts its business, not simply because of what it makes."

The ASH report
notes that it took until 1998 before BAT acknowledged smoking caused any harm
at all. "Up until then they had undertaken an elaborate public relations
exercise to maintain a ‘controversy’ about data that had convinced most
respectable scientists some 40 years earlier that smoking was a cause of
serious diseases like cancer. This is perhaps the greatest exercise in
corporate mendacity the world has ever known and one of the most serious
corporate crimes of the twentieth century. No admission has ever been made, no
apology has been forthcoming and no one has lost their job."

But the report
does not condemn the company only for past practices. Among many other
indictments, it documents how:

* BAT’s
worldwide programs supposedly designed to prevent youth smoking actually make
the practice more attractive to kids (by suggesting smoking is an adult
activity), while diverting attention from the issue of getting adult smokers to
quit. (BAT says it "does not want children to smoke" and hopes its
programs "will have a positive effect on preventing youth smoking.")

* BAT continues to
deny the harmful health effects of second-hand smoke. (BAT says "there is
no convincing evidence that ETS [environmental tobacco smoke or second-hand
smoke] is a cause of chronic diseases," and the company advocates indoor
ventilation instead of smoke-free areas.)

* BAT has worked
to oppose efforts at the World Health Organization to adopt a strong Framework
Convention on Tobacco Control, including a recommended ban on tobacco
advertising and promotion. (BAT says that, while it accepts that tobacco advertising
should be subjected to special rules, existing regulations already go too far.)

Perhaps the most
explosive news to emerge about BAT this year came from Australia, where a judge
found the company to have engaged in an elaborate, carefully considered,
company-wide document-destruction scheme.

In a case filed
against BAT by a dying smoker named Rolah Ann McCabe, Judge Geoffrey Eames
found that BAT systematically destroyed key documents including reports,
memoranda and other materials specifying what the company knew about the
addictiveness of nicotine and when it knew it, what it knew about health
impacts of smoking and when it knew it, and matters relating to marketing
cigarettes to children, among other topics.

"The
predominant purpose of the document destruction," the judge found,
"was the denial to plaintiffs of information which was likely to be of
importance in proving their case, in particular, proving the state of knowledge
of the defendant of the health risks of smoking, the addictive qualities of
cigarettes and the response of the defendant to such knowledge."

BAT defended,
and continues to defend, the shredding on the grounds that the company was not
obligated to hold on to documents that may be useful to an opposing party in
some future litigation. But the judge stated that while corporations are not
obligated to store documents indefinitely, they are not free to destroy them in
anticipation of future litigation.

Finding the harm
from the document to be unknowable and irreparable, the judge issued a verdict
in favor of McCabe without allowing BAT to mount a defense. The jury awarded
McCabe more than $350,000. Because McCabe was dying, and in an effort to
expedite the case, her attorneys agreed before the litigation that no punitive
damages would be sought. BAT appealed the decision.

As Multinational
Monitor was going to press, the appellate court handed down a decision
reversing Judge Eames’ holding. The Court of Appeal ruled that, although BAT
did destroy vast troves of documents, it was not required to preserve them, or
at least the obligation was not such that the judge was justified in denying
BAT the ability to mount a defense. The appellate court said it did not offer
judgment on whether BAT’s conduct might be considered an effort to pervert
justice. But it did effectively rule that BAT’s actions were not wrongful in
the way found by Judge Eames, and that some of BAT’s internal documents were
protected by attorney-client privilege, as the company had claimed.

The case will
now be considered on the merits of McCabe’s claim for damages. Rolah Ann McCabe
died shortly before the appellate ruling. Her family intends to continue the
case.

CATERPILLAR

Total Devastation

There is total
devastation, no whole standing house, as though someone has bulldozed a whole
community.

If anyone was in
a house they could not have survived.

There is nothing
but rubble and people walking around looking dazed.

There is a smell
of death under the rubble.

These are the
words of an Amnesty International delegate who entered Jenin refugee camp in
the occupied West Bank minutes after the Israeli Defense Forces (IDF) lifted
the blockade on April 17, 2002.

IDF forces that
entered Jenin and Nablus brought tanks or bulldozers through roads, often
stripping off the front of houses.

In Hawashin and
neighboring areas of Jenin refugee camp, 169 houses with 374 apartment units
were bulldozed, mostly after the fighting had ceased.

As a result,
more than 4,000 people were left homeless.

In both Jenin
and in Nablus, there were instances where the IDF bulldozed houses while
residents were still inside.

The report found
that IDF soldiers either gave inadequate warnings or no warnings before houses
were demolished and subsequently failed to take measures to rescue those
trapped in the rubble and prevented others from searching for them.

Amnesty
International documented three such incidents leading to the deaths of 10
people. Six others on the hospital lists of those killed in Jenin were recorded
as being crushed by rubble.

This year, a
group of university professors and students have organized Sustain (Stop U.S.
Tax-funded Aid to Israel Now).

One of its first
campaigns is to pressure Caterpillar to stop selling house demolishers to
Israel.

Sustain points
out that the Israeli Defense Forces have destroyed more than 7,000 Palestinian
homes since the beginning of the Israeli occupation in 1967, leaving 30,000
people homeless.

Most home
demolitions target civilians who have not been charged with any crime. They are
conducted as collective punishment or to clear the way for illegal Israeli
settlements on Palestinian land.

The Fourth
Geneva Convention prohibits collective punishment and the destruction of
personal property in occupied lands.

The Caterpillar
D-9 bulldozer is used by the Israeli military to carry out its program of home
destruction.

The Sustain
activists are demanding that Caterpillar uphold its own code of conduct by
halting sales to the Israeli Defense Forces until civilian home demolitions
cease.

The Caterpillar
code states: "As a global company we can use our strength and resources to
improve, and in some cases rebuild, the lives of our neighbors around the
world."

"How can
Caterpillar claim to rebuild lives when its products are used to uproot and punish
civilians?" says Afifa Ahmed, a Sustain activist.

The Sustain
campaign will conduct coordinated national pickets and direct action at
Caterpillar manufacturing and sales sites, in addition to street theater and
other creative tactics.

Caterpillar has
said in response to the campaign that it never intended its machinery to be
used as the IDF uses them. The company declined to respond to requests for
comment from Multinational Monitor. In May, a spokesperson told a British
paper, the Leicester Mercury, "Caterpillar shares the world’s concern over
unrest in the Middle East. While we have compassion for those affected by the
escalating political strife, we have neither the right nor the means to police
customer use of Caterpillar equipment."

But as Georgetown
University professor Mark Lance points out in a letter to Caterpillar CEO Glen
Barton, "you know precisely how your equipment is being used."

"You are
therefore knowingly facilitating crimes and there is no way to avoid the
responsibility that comes with this," Lance writes.

CITIGROUP

Some Rich
Bastard’s Son

The New Yorker
ran a cartoon this year showing four U.S. soldiers sitting around talking. One
says to the other three: "I just hope it doesn’t turn out that we’re going
after Saddam to get some rich bastard’s son into some school."

This is an
apparent reference to Jack Grubman, the former Salomon Smith Barney analyst.

Salomon is a
unit of Citigroup.

Citigroup,
formed by a 1998 merger of Travelers and Citibank, is the country largest bank
holding company.

In January 2001,
Grubman wrote that he had a reason for upgrading AT&T stock ó Citigroup CEO
Sanford Weill wanted him to upgrade it, because Weill was in a power struggle
and wanted AT&T CEO Michael Armstrong’s help in unseating Weill’s rival,
John Reed.

In one e-mail,
Grubman wrote, that, in exchange for his assistance to Weill, Weill helped him
get his kids into an exclusive Manhattan nursery school. Grubman now says he
was fibbing in the e-mail.

Meanwhile,
federal and state officials are investigating Citigroup and other investment
banks for recommending stock that they described internally as
"crap."

And Citi faces
hundreds of millions in fines.

And the media and
public are focused on Grubman’s kids and the nursery school.

Not the subject
of endless commentary is how Citigroup, the nation’s largest banker, was, at
the same time, screwing the poor out of house and home.

Earlier this
year, Citigroup Inc. was forced to pay $215 million to resolve Federal Trade
Commission (FTC) charges that Associates First Capital Corporation and
Associates Corporation of North America engaged in systematic and widespread
deceptive and abusive lending practices.

Citigroup
acquired The Associates in November 2000, and merged The Associates’ consumer
finance operations into its subsidiary, CitiFinancial Credit Company.

The company
engaged in subprime lending -- the extension of loans to persons who are
considered to be higher risk borrowers.

The Associates
was one of the nation’s largest subprime lenders.

In 1999, the
total amount of all outstanding loans in The Associates’ U.S. consumer finance
portfolio was approximately $30 billion.

In March 2001,
the FTC sued The Associates, alleging that it had violated the FTC Act through
deceptive marketing practices that induced consumers to refinance existing
debts into home loans with high interest rates and fees, and to purchase
high-cost credit insurance.

The complaint
also named as defendants Citigroup and CitiFinancial, as successors to The
Associates.

The FTC also
charged that The Associates engaged in deceptive practices designed to induce
borrowers unknowingly to purchase optional credit insurance products, a
practice known as "packing."

These insurance
products were intended to cover the borrower’s loan payments in various
circumstances, such as death or illness, and the premiums were added to the
principal amount of the loan.

If the consumer
noticed that the credit insurance products were being added to the loan, The
Associates’ employees used various tactics to discourage them from removing the
insurance, the complaint alleged.

The complaint
also charged The Associates with additional deceptive practices and law
violations.

Citigroup says
the problems at The Associates stem from the old regime, and that it is acting
to clean things up. "When we bought Associates we found certain
unacceptable practices that needed to be changed," said Citigroup
President Robert Willumstad at the time of the settlement with the FTC.
"We are confident that today’s settlement provides redress to those former
Associates customers who were harmed. We’re gratified this matter is behind
us."

"Since the
acquisition of Associates in late 2000, we have implemented a series of
significant best practices throughout our consumer finance operation,"
said Willumstad. "These reforms are grounded in our longstanding
commitment to providing access to credit to those who need it most while
setting consumer protection standards that lead the industry. Some of these,
including our discontinuation of single premium credit insurance on real
estate-based loans, have driven industry-wide change. We also recently
announced enhancements to our sales practices and a substantial reduction in
the maximum points on real estate loans made at CitiFinancial branches from 5
to 3 percentage points. This reduction sets us apart from our competitors in
the industry."

In a separate
settlement this year, Citibank, a unit of Citigroup and the nation’s largest
credit card issuer, was forced to pay $1.6 million to settle allegations
brought by 26 state attorneys general that it engaged in unfair and deceptive
practices by telemarketing firms that solicited business using Citibank’s
customer lists and encrypted credit card numbers.

"When a
company sells its customer lists to telemarketers, it has some obligation to
protect these consumers from unfair and deceptive solicitations," said
Illinois Attorney General Jim Ryan "This agreement will hold Citibank
responsible for the way these telemarketers do business with Citibank
customers."

The agreement
settles a multi-state, two-year investigation led by Ryan and attorneys general
in New York, California and Vermont.

The states were
looking into consumer complaints about the marketing practices of Citibank’s
business partners.

The
investigation revealed that since the mid-1990s, Citibank received a percentage
of sales made by companies selling various products and services to bank
customers. Consumers complained that deceptive pitches by these companies resulted
in consumers being charged for products and services that they did not
knowingly agree to purchase.

When the trial
period ended, consumers did not understand that the companies would charge
their credit card for continued use unless the consumers canceled during the
trial period.

Around the
world, Citigroup finances environmentally unsound and destructive projects such
as Peru’s Camisea natural gas project and Ecuador’s controversial OCP oil
pipeline (see "The Cost of Living Richly: Citigroup’s Global Finance and
Threats to the Environment," Multinational Monitor, April 2002).

DYNCORP

The Price of a Privatized
Military

The great German
sociologist Max Weber wrote that the definition of a state was that it claims a
monopoly on the legitimate use of physical force.

Maybe it’s time
for a post-modern update, because governments are now happy to share that
monopoly with private corporations.

Case in point:
DynCorp, a $2 billion-a-year company that describes itself as "a leading
provider of diversified outsourcing and information technology services to
government agencies." Some critics say the company is better described as
a mercenary firm.

DynCorp is among
the leaders in a fast-growing industry to take over privatized functions of the
U.S. military. Some of these functions, like providing food services, are
relatively benign. Others are less so, and involve the takeover of
quasi-military functions.

For example, the
U.S. government is relying on DynCorp to provide protection for Afghan
President Hamid Karzai. This fall, responsibility for Karzai’s security was
shifted from the Pentagon to the State Department’s Diplomatic Security agency.
A State Department spokesperson says, "Diplomatic Security is a civilian
law enforcement and security service that operates where the rule of law
governs. That is not necessarily the situation in Afghanistan. We looked to
bring on board necessary specialists to do the job properly. This required the
use of contractors." The spokesperson declined to comment on whether
DynCorp security personnel would be armed.

This type of
privatization of military matters "is another way to give the government
deniability," says William Hartung, director of the New York-based Arms
Trade Resource Center. The military "pays the private company to do the
dirty work. They hope that gives them more distance if personnel are killed
than if they were uniformed service people. If [private company employees] are
engaged in unethical behavior or repressive acts, the government is
removed" from that.

What this really
involves, Hartung says, is "unaccountability." He warns that it is
even more difficult to find out what private military contractors are doing
than it is for the Pentagon, and that contractor activity tends to fly below
Congressional and media radar screens.

One example of
how contractors are able to escape accountability surfaced earlier this year in
Congress. The Subcommittee on International Operations and Human Rights of the
House of Representatives International Relations Committee heard testimony from
Ben Johnston, a former DynCorp employee. Johnston, who worked with DynCorp in
Bosnia, reported that he witnessed DynCorp employees trading in sex slaves, as
young as 12. When he reported what he had seen to army authorities, Johnston
says, DynCorp fired him. DynCorp fired the implicated DynCorp employees and
sent them home, but because they were civilians they were not subjected to
military discipline; and they escaped any kind of prosecution in Bosnia.

Among DynCorp’s
other activities, it is flying planes that spray herbicides on coca crops in
Colombia. Farmers on the ground allege that the herbicides are killing their
legal crops, and exposing them to dangerous toxins.

A group of
farmers in Ecuador has filed a class action lawsuit against DynCorp in U.S.
court, alleging the herbicides sprayed from the company’s planes drifted across
the Ecuador-Colombia border, with toxic effect. The plaintiffs allege the
spraying has had particularly serious effects on their children, causing
serious deformities, major internal bleeding, and, in some cases, deaths of
infants.

The lawsuit, which
is being handled by the Washington, D.C.-based International Labor Rights Fund
and the Amherst, Massachusetts Law Offices of Cristobal Bonifaz, alleges that
the spraying of the farmers’ lands is "nothing less than an act of
mercenary war carried out surreptitiously by the DynCorp Defendants in total
defiance of international law, and outside the parameters of any legal contract
to implement ‘Plan Colombia,’" the U.S. effort to wipe out illegal drug
plantations in Colombia.

They claim that
the DynCorp program is designed not just to spray drug plantations, but to
maintain an aggressive military presence on the Ecuador-Colombia border,
"to intimidate the local population into submission and prevent disruption
to [the] extremely profitable oil ventures" carried out in the region, or
planned for the area, by ChevronTexaco, BP Amoco and Occidental.

DynCorp could
not be reached for comment.

M&M/MARS

Slow on Slavery

Is it too much
to ask corporations not to sell products made with child slave labor?

Why should an
industry whose products are made with child slave labor need to be dragged
kicking and screaming into taking modest measures to address the problem?

Following
breakthrough investigations by Knight-Ridder reporters, there have been a
flurry of reports about the trafficking in child indentured workers to labor on
cocoa plantations and farms in the Ivory Coast, which supplies 43 percent of
the world’s cocoa.

Many of the
children are traded across borders, from Mali, Benin, Togo and Burkina Faso.
The U.S. State Department estimates 15,000 children have been sold into bondage
from these countries and transported to cocoa plantations in the Ivory Coast.

The child
workers -- most aged 12 to 16, with some as young as 9 -- do the hot and
miserable work of harvesting cocoa beans. Many are whipped and poorly fed. They
have no idea what chocolate, the ultimate product of their labor, tastes like.

Behind the
regional trade in children, and the widespread use of indentured and abusive
child labor on cocoa farms, as well as elsewhere in the economy, are a number
of inter-related factors. Extreme poverty leads families to sell their
children. International Monetary Fund (IMF) and World Bank-recommended
structural adjustment policies have intensified poverty in the region. A
tradition of moving children within the extended family to facilitate
educational opportunities has been perverted to enable trafficking in children.
Low cocoa prices have pushed farmers to use the cheapest labor they can find.

Chocolate
companies in the rich countries have nothing to do with most of these
underlying factors.

But the industry
has responded tepidly to revelations about child slaves in the fields where
their raw materials are grown. Initial denials of the problem gave way to
grudging acknowledgement, and ultimately to an industry-wide plan.

In June 2001,
the industry acknowledged and denounced the use of child labor slaves. "As
an industry, we strongly condemn abusive labor practices, and our goal is to be
part of the worldwide effort to solve this problem. If one child is affected,
that is one child too many," Larry Graham, president of the Chocolate
Manufacturers Association, said at the time.

In September
2001, the industry signed a protocol designed to ensure that its products were
not made with child slave labor. It said cocoa should be grown in accordance
with International Labor Organization (ILO) Convention 182 on the elimination
of the worst forms of child labor, and committed to taking further action in
2002.

In May 2002, the
Chocolate Manufacturers Association signed a Memorandum of Cooperation with a
number of nongovernmental organizations and trade unions. In July, they
established an "International Cocoa Initiative -- Working Towards
Responsible Labor Standards for Cocoa Growing." The Initiative set as its
goals to:

* Support field
projects and act as a clearinghouse for best practices that help eliminate
abusive child and force labor in the growing of cocoa;

* Develop a
joint action program of research, information exchange and action to enforce
internationally recognized abusive child and forced labor standards in the
growing of cocoa; and

* Help determine
the most appropriate, practical and independent means of monitoring and public
reporting in compliance with these labor standards.

* Critics,
however, say the industry plan falls short. "The industry led initiative
has resulted in a privatized mechanism without binding and enforceable labor
rights," says a statement from the International Labor Rights Fund.
"Privatized self-regulation may serve well in various contexts, but when
it comes to child labor, we must demand more."

The critics are
looking for solutions that give farm jobs to adults and pay farmers a fair
price. As part of a solution, activists are asking the chocolate companies to
buy Fair Trade cocoa. The San Francisco-based Global Exchange is asking
companies to purchase a modest 5 percent of their product from Fair Trade
providers.

Cocoa certified
as Fair Trade by Transfair USA and other international certifying organizations
is sold for a sustainable 80 cents a pound and must be grown and harvested in
compliance with ILO conventions on both child and forced labor.

In 2001, Fair
Trade cocoa growers produced 89 million pounds of cocoa, but only sold 3
million at Fair Trade prices.

Mars is one the
largest chocolate makers in the United States, and the third largest private
companies in the country. M&Ms are among the world’s best-selling chocolate
brands. The three Mars siblings who own the company are each ranked tenth on
the Forbes list of richest people in the United States, and estimated to be
worth a combined $30 billion.

"There is a
crisis destroying the livelihoods of 25 million coffee producers around the
world," reports Oxfam. "The price of coffee has fallen by almost 50
percent in the past three years to a 30-year low. Long-term prospects are grim.
Developing country farmers, mostly poor smallholders, now sell their coffee
beans for much less than they cost to produce ó only 60 percent of production
costs in Vietnam’s Dak Lak Province, for example. Farmers sell at a heavy loss
while branded coffee sells at a hefty profit."

For many
coffee-producing countries, plummeting prices are devastating their national
economies. Central American countries have seen revenues fall 44 percent in a
year, from 1999/2000 to 2000/2001. In Ethiopia, coffee export revenues declined
42 percent. In Uganda, where a quarter of the population depends on coffee for
their livelihood, coffee earnings dropped 30 percent.

For individual
farmers around the world, declining prices have pushed them to the edge of
survival, or destroyed their means of livelihood altogether. Tens of thousands
are losing their land in Central America alone, and thousands of plantation
workers have been thrown out of work.

The low prices
are due to a global surplus of coffee beans. The surplus reflects a variety of
forces, including the collapse of domestic and international marketing controls
by producer countries ó in part a consequence of IMF and World Bank policies, the
entrance of Vietnam into the global coffee market and a surge in Brazilian
production, and stagnant demand in rich countries.

The market
imbalance has further shifted power to the giant coffee roasters. Coffee
farmers get 1 percent or less of the price of coffee at Starbucks, and about 6
percent of the cost of a supermarket pack of coffee, according to Oxfam.

Meanwhile, the
coffee roasters are operating with extremely high profit margins.

Between them,
the four largest companies -- Philip Morris/Kraft (Maxwell House), Nestle
(Nescafe), Procter & Gamble (Folgers) and Sara Lee (Douwe Egberts and
others) -- plus a fifth, German company, Tchibo, buy almost half of the world
supply of green coffee beans.

These companies
do not have complete control of the market, but they have the power to move to
a global solution. They have not.

There will be no
solution without management of price and supply.

Activists are
demanding the companies buy a modest 5 percent of their beans from Fair
Trade-certified growers. Fair Trade coffee ensures farmers get a sustainable
price. Procter & Gamble, among others, has refused.

A global
solution will also require a public system of supply management. The International
Coffee Organization says destruction of 5 million bags of low-grade coffee
would lead to a 20 percent rise in the commodity price. Oxfam has called for
such measures -- estimated to cost $100 million, but likely to bring producers
an extra $600 million to $700 million in revenue -- as a central element of its
coffee campaign. It is urging the roasters and consumer countries to donate
money to pay for the impoundment of 5 million bags.

Procter &
Gamble’s response is dismissive. P&G says it supports the National Coffee
Association’s (NCA’s) position on the coffee crisis. NCA supports a number of
proposals, including farmer education regarding crop diversification, roaster
use of long-term contracts, efforts to expand the coffee consumer market,
gathering more data, and opposing U.S. tariffs on agricultural products which
purportedly discourage farmers from switching to non-coffee crops (tariffs are
low or non-existent on coffee), but does not have a single, coherent plan to
address the crisis. P&G says it is not prepared to support the International
Coffee Organization’s scheme because it is not the NCA position.

P&G says its
response to the coffee crisis is its newly formed alliance with TechnoServe, a
non-profit organization, to help small-scale coffee growers in Latin America.
P&G donated $1.5 million to TechnoServe, to "help create long-term
solutions to make coffee growing profitable for as many people as possible.
This will be accomplished by improving the quality of coffee, exploring alternatives
to coffee production and other initiatives."

SCHERING PLOUGH

Here Come the
Feds

This has been a
bad year for the maker of Claritin and other allergy drugs, anticancer drugs
and Dr. Scholl’s foot products.

Let us count the
ways.

First, in
August, the Justice Department opened an investigation of both Schering Plough
and Wyeth to see whether they had engaged in price fixing by, on the same day,
reducing fees to their pharmaceutical brokers.

Second, Schering
is the subject of an ongoing criminal investigation by federal prosecutors in
Boston. They are looking at whether the company is ripping off Medicaid by
repacking drugs at higher prices. A 1990 law requires companies to report to
Medicaid the best price it offers its private customers.

In conjunction
with this investigation, prosecutors in Boston in November issued two more
subpoenas to the company requesting information on the company’s honoraria and
other payments to doctors, insurers and educational institutions.

Third, in June,
federal prosecutors in New Jersey began investigating whether or not the
company imported ingredients that had not been approved by the Food and Drug
Administration for use in the United States. Schering denies these allegations.

Fourth, in May,
the New York Times reported that the Food and Drug Administration (FDA) had
initiated a criminal probe into two Puerto Rican plants that make Schering’s
Nasonex nasal spray and Celestone, a corticosteroid.

After news of
the criminal investigation leaked out, Schering announced that it will pay $500
million to settle charges of repeated failure over recent years to fix problems
in manufacturing dozens of drugs at four of its facilities in New Jersey and
Puerto Rico.

The $500 million
settlement shatters the previous FDA record settlement amount of $100 million.

The government
sought the $500 million to disgorge profits made by the firm on drug products
that were produced over the last three years.

The company also
agreed to future monetary payments of up to $175 million and to disgorge
additional profits should it fail to adhere to timelines established in the
consent decree.

The government’s
action follows 13 inspections at four New Jersey and Puerto Rico facilities
since 1998 during which the FDA found significant violations of quality control
regulations related to facilities, manufacturing, quality assurance, equipment,
laboratories, and packaging and labeling.

The company has
had a history of failing to comply with quality control requirements at these
plants, which produce about 90 percent of the firm’s drug products.

The decree
affects about 125 different prescription and over-the-counter drugs produced at
the Puerto Rico and New Jersey facilities.

As part of the
decree, the company agreed to suspend manufacturing 73 other products.

"This
agreement builds upon the efforts we have undertaken to date to resolve these
manufacturing issues," CEO Richard Jay Kogan said at the time of the
settlement, "The company has worked closely and cooperatively with the FDA
throughout this process and achieved two key objectives: keeping our plants
open and operating, and continuing to make available our major pharmaceutical
products to meet the needs of patients. We are confident of our ability to move
forward under the agreement and complete our improvement programs
successfully."

Fifth, in April,
European Community regulators initiated a safety review of Claritin after
reports from Swedish studies showed that about 1 percent of boys born to
mothers who used Claritin during early pregnancy were born with a malformed
penis. The condition occurred at a rate of three times the normal rate.

Finally, the
company’s longstanding efforts to price gouge on Claritin were dealt a major
blow at the end of the year, when health insurer pressure forced the company to
make the drug available over the counter.

SHELL OIL

The Politics of
Hype

What have the
oil companies been up to this year?

BP Amoco said
that it was pulling out of a major lobbying effort to open the Arctic National
Wildlife Refuge in Alaska to oil drilling, and has been running ads around the
United States touting its environmental credentials.

BP wants people
to believe that the company is moving "beyond petroleum" -- BP -- get
it? -- into the solar age.

ExxonMobil
announced that it was donating $5 million to the National Fish and Wildlife
Foundation in an effort to save the tiger.

At a press
conference announcing the company’s donation to the Save the Tiger Fund,
ExxonMobil handed out cuddling little tiger beanie baby dolls for the kids.

ExxonMobil wants
people to believe that it cares about the natural world and all of its living
creatures.

In May 2000,
Royal Dutch Shell set up a $30 million foundation to push for sustainable
energy and social investment projects around the world.

The Shell
Foundation announced that it was spending $3 million on a campaign to raise
awareness of how the loss of Louisiana’s wetlands will affect the state and to
gain support for efforts to save coastal Louisiana.

Shell called on
environmentalist Amory Lovins to do an energy audit of one of its petrochemical
facilities in Denmark.

Shell also has
pledged $7 million to the World Resources Institute in Washington, D.C. to find
environmentally sound solutions to the problems of urban transport.

And Shell
donated $3.5 million to form the "Shell Center for Sustainability" at
Rice University.

Now, of course
these are good deeds.

But why are the
oil companies doing this?

Are they doing
it because they want to move the world away from the fossil fuel economy that
is destroying the environment?

Are they doing
it because they actually want to move the world to a solar energy economy?

Or are they
doing it to greenwash their image and buy silence from their environmental
critics?

Are they doing
it to cover up their past history of oil spills, workers injured and killed on
the job, and the spewing of cancer-causing pollutants into the environment?

It was John D.
Rockefeller, the turn of the century millionaire, who gave out dimes to
children. Why did Rockefeller give out dimes to children? To buy silence and
good will.

Similarly, the
oil companies today are giving millions to environmental groups and activists
to buy silence and good will.

Now comes Jack
Doyle, who has just completed a remarkable corporate history of Shell, Riding
the Dragon: Royal Dutch Shell & the Fossil Fire.

The book is
published by the Boston based Environmental Health Fund and is also available
on-line on www.shellfacts.org.

In documenting
hundreds of cases of human rights abuses, oil pollution, worker injuries and
deaths, and the manufacture of cancer-causing chemicals, Doyle makes the point
that Shell and the big oil companies have a lot to hide.

Despite all the
rhetoric of moving "beyond petroleum," they continue to secure
long-term contracts that tie them to the fossil fuel economy, with all of its
geopolitical hazards, all of its human rights abuses and all of its
environmental destruction.

Shell is
spending millions of dollars to create the impression that it is a socially and
environmentally responsible oil company.

Principle 6 of
the company’s nine business principles is "To conduct business as responsible
corporate members of society, to observe the laws of the countries in which
they operate, to express support for fundamental human rights in line with the
legitimate role of business and to give proper regard to health, safety and the
environment consistent with their commitment to contribute to sustainable
development."

But Doyle makes
the point that the world’s second or third largest oil company remains one of
the world’s biggest environmental violators.

The book
documents a concerted campaign by Shell to halt critical government reports,
rewrite history and cover-up its misdeeds.

Since Shell’s
alleged involvement in the execution of its highest profile critic, Ken
Saro-Wiwa of Nigeria, the company has claimed to adopt a new set of principles
aimed at reforming its internal practices and re-making their image.

"Despite an
ongoing civil trial in New York on Shell’s alleged role in the execution of
Saro-Wiwa and other activists, Shell has the temerity to advertise itself as a
new company committed to human rights, environmental protection and sustainable
development," Doyle said. "There is ample reason to be skeptical
about this manufactured image, which is wildly at odds with the facts."

Shell has a long
history of disregard for employees and the environment.

In 1995, Shell
attempted to dispose in the North Sea a huge offshore oil storage facility ó
the Brent Spar. There was an enormous worldwide protest and a boycott of Shell
products. Under pressure, Shell decided to dismantle it and used it to make
some docking facilities.

Doyle says that
the "new" Shell continues to run an "apartheid era"
facility in Durban, South Africa, where there are leaking pipes, fires,
explosions and ongoing pollution, and where more than one million liters of oil
have been dumped so far.

In the appendix
to his book, Doyle lists more than 300 environmental and public safety
incidents between 1947 and 2002 -- spills, leaks, fires explosions, lawsuits
and fines.

Here are a few
examples of Shell’s problems just this year:

In May, federal
officials sued Shell Pipeline in connection with the June 1999 gasoline
pipeline rupture near Bellingham, Washington that killed three young people.
The complaint alleges that the rupture was caused by gross negligence in the
operation and maintenance of the pipeline. The rupture resulted in the
discharge of over 230,000 gallons of gasoline in local waterways and caused the
deaths of three young people as well as a severe property damage and
environmental damage. Officials are seeking up to $18.6 million in fines
against Shell.

Also this year,
Shell was ordered to pay $135,000 to settle allegations brought by the
Occupational Safety and Health Administration (OSHA) that it failed to
implement standards that protect workers against hazardous chemicals in one of
its processors in Geismar, Louisiana. OSHA opened its investigation after a
February 12 accident at the facility killed a catalyst technician.

In June, a
Shell-chartered Singapore bunker oil tanker spilled about 450 tons of oil into
port waters just south of Singapore after a collision with another ship. The
accident ruptured one of the Shell tanker’s cargo tanks, dumping marine fuel
oil into the sea.

In August, a storage
tank containing 30,000 barrels of residual fuel oil exploded at Houston Fuel
Oil Terminal Co., a 50 percent-owned Shell joint venture specializing in
handling and storage in Houston. The explosion and fire produced a dark,
billowing cloud of soot and smoke that rose more than a mile into the air.

There’s nothing
new about new Shell, ExxonMobil and BP. They are bought into the fossil fuel
economy.

We need to get
out.

WYETH

"A Triumph
of Marketing Over Science"

Manufacture a
consumer need. Invent a consumer product to satisfy the newly created need.
Hawk the product.

That, in short,
may be the epochal story of capitalism.

It’s one thing
when the new consumer product is a pet rock, or blue soda.

It’s altogether
another thing when the product is a pharmaceutical, where the stakes can be
life and death.

More than ever,
Big Pharma’s standard mode of operation is to invent a disease, and then
provide a product. That’s the case with the pathologization of pre-menstrual
discomfort (now labeled Pre-Menstrual Dysphoric Disorder in ads by Eli Lilly)
and basic shyness (the Social Anxiety Disorder so frighteningly portrayed in
ads by SmithKline Beecham).

But the
pioneering and still most egregious example of this phenomenon, at least in the
modern era, is the hormone replacement therapy (HRT) sold by Wyeth under the
brand name Prempro.

Earlier this
year, a National Institutes of Health study concluded that HRT -- a combination
of estrogen and progestin -- posed major health risks to the millions of women
in the United States, and around the world, that Wyeth and others had lured
into taking HRT.

The NIH study,
known as the Women’s Health Initiative, was a clinical trial to assess HRT for
use by healthy women. Researchers ended the study ahead of schedule, when early
results provided clear evidence of the hazards of HRT. The study results,
published in the Journal of the American Medical Association, showed that
long-term HRT increases the risks of breast cancer, heart attack, stroke and
pulmonary embolism. Those risks outweigh the benefits of long-term use of the
drug in reducing the risks of bone fracture and colon cancer.

The Women’s
Health Initiative was the first large, randomized clinical trial to test the
effects of HRT. Wyeth had long imputed a wide array of benefits to HRT, but the
only scientific basis for these claims were observational studies, simply the
reported effects from women taking the drug. A randomized clinical trial, by
contrast, compares the effects of a drug in a patient group with the effects in
a comparable group taking a placebo. Clinical trials are designed to avoid
problems common to observational studies, such as a non-random group of
patients -- in the case of HRT, probably healthier and better-educated women --
taking the product.

For decades,
Wyeth (and Ayerst, the originator of HRT, a company acquired by Wyeth) had
proclaimed the benefits of hormone therapy for menopausal and post-menopausal
women.

In 1966, Dr.
Robert Wilson published Feminine Forever, a book which became a bestseller. The
book promoted estrogen as a wonder drug that could counter the changes of
menopause and keep women young, attractive, sexually vital and happy. Wilson
labeled menopausal women a no-longer truly female "intersex," who
were "dull and unattractive." Estrogen, he said in the book, and
through subsequent advocacy work with a foundation he established, could save
these women, preserving their beauty and health. Years later, the Washington
Post revealed Ayerst had funded Wilson’s work.

Wyeth
effectively continued with the same promotional line for 35 years, employing
spokespersons like Lauren Hutton to proclaim hormones as their beauty secret,
and with ads and marketing schemes conveying notions that HRT would not only
prevent heart disease and other ailments, but stop wrinkles and keep women
looking and feeling young. The Women’s Health Initiative study showed that HRT
actually contributed to heart disease.

Wyeth
spokesperson Douglas Petkus, denies any knowledge of the company promoting HRT
to address general and cosmetic problems with aging such as wrinkles, and to
maintain beauty. "A pharmaceutical product can only be promoted for an
approved use, and that is not an approved use," he says.

But critics say
there is no doubt that Wyeth ran a spectacularly effective campaign to induce
women to use HRT for these and other unproven purposes.

"Pharmaceutical
companies have used statistical smoke and mirrors to tout unproven benefits,
minimize risks and mislead physicians into being an unsuspecting marketing
force for a regimen that harms healthy women," says Cynthia Pearson,
executive director of the National Women’s Health Network.

"This is
not a story of science moving sedately forward, carefully adding pieces to a
puzzle before making recommendations to patients," she says. "This is
a story of the corruption of the medical and scientific community. The belief
that hormones are good preventive medicine has been a triumph of marketing over
science." Not only did Wyeth use direct-to-consumer ads to convince women
to take a drug that was harmful for them, she notes, but it maintained a
full-bore campaign directed at doctors, through gifts, paid presentations at
scientific conferences, and funded articles or ads presented as articles, among
many other tactics.

Russell Mokhiberis editor of the
Washington, D.C.-based Corporate Crime Reporter. Robert Weissman is editor of
the Washington, D.C.-basedMultinational Monitor. They are co-authors of Corporate Predators: The Hunt
for MegaProfits and the Attack on Democracy (Monroe, Maine: Common Courage
Press, 1999;http://www.corporatepredators.org).